Executive Summary

Q4 2024 was weak on volume and execution: revenue fell 15.7% YoY to $163.3M; GAAP diluted EPS was $(1.04) driven by a $28.8M non-cash tax valuation allowance; adjusted EPS was $(0.15); adjusted EBITDA declined to $0.9M (0.6% margin) .
Management introduced FY2025 guidance: Net Sales $670–$710M and Adjusted EBITDA $25–$30M, implying EBITDA growth and margin expansion as cost actions flow through despite soft end markets .
Structural actions are largely complete (Industrial Automation and Cab Structures divested; Chillicothe consolidation; Morocco/Mexico ramps). Mgmt says ~85% of operational inefficiencies are remediated, with $15–$20M 2025 cost savings expected and focus on working capital to drive positive FCF and deleveraging .
Setup for stock reaction: catalysts hinge on execution against cost/efficiency plan, Electrical Systems new wins ramp (~15% of 2025 ES revenue), Class 8 prebuy into H2’25/H1’26, and working capital release to reduce 4.7x YE net leverage; risks include continued ConAg softness, slower ramps, and covenant sensitivity (amended in Dec) .

What Went Well and What Went Wrong

What Went Well
- Completed portfolio streamlining (sold FinishTEK, Cab Structures, Industrial Automation) and consolidated Chillicothe; opened Morocco and ramping Aldama, Mexico; mgmt views actions as foundation for margin expansion and growth .
- New business wins >$97M for 2024 (risk-adjusted), concentrated in Electrical Systems outside ConAg; management targets ~$100M annually going forward .
- Aftermarket returned to YoY growth in Q4 (+4%) with improved volumes; segment delivered $3.1M adjusted operating income (9.9% adj OI margin) .
What Went Wrong
- Revenue and profitability deteriorated as volumes declined across Vehicle Solutions and Electrical Systems; Q4 adjusted EBITDA margin compressed to 0.6% on lower volumes, unfavorable mix, operational inefficiencies and FX .
- Electrical Systems saw steep declines (Q4 revenue down 28.3% YoY) from global ConAg weakness and slower new win ramps; Q4 adj operating loss of $(1.7)M .
- Leverage increased into year-end; net leverage was 4.7x TTM adjusted EBITDA (continuing ops), necessitating a December debt amendment for covenant flexibility; mgmt plans refinancing discussions in 2025 .

Financial Results

Overall metrics (continuing ops)

Metric	Q2 2024	Q3 2024	Q4 2024
Revenue ($M)	$229.9	$171.8	$163.3
Gross Margin %	9.1%	9.5%	8.0%
Operating Margin %	0.3%	(0.6)%	(3.2)%
Adjusted EBITDA ($M)	$10.0	$4.3	$0.9
Adjusted EBITDA Margin %	4.3%	2.5%	0.6%
GAAP Diluted EPS	$(0.05)	$(0.03)	$(1.04)
Adjusted Diluted EPS	$0.06	$(0.01)	$(0.15)

Key drivers and items

Q4 net loss from continuing ops $(35.0)M included a non-cash tax valuation allowance of $28.8M; interest expense was $2.2M .
Liquidity at 12/31/24: $26.6M cash, $50.5M outstanding on revolvers, $84.4M availability; total liquidity $111.0M .
Free cash flow (continuing ops) in Q4: $0.8M; total company FCF $(8.6)M (continuing + discontinued) .

Segment breakdown

Segment	Q3 2024 Revenue ($M)	Q3 2024 Adj Op Inc ($M)	Q4 2024 Revenue ($M)	Q4 2024 Adj Op Inc ($M)
Vehicle Solutions	$97.3	$3.789	$91.4	$2.770
Electrical Systems	$43.4	$0.890	$40.3	$(1.685)
Aftermarket & Accessories	$31.1	$3.900	$31.6	$3.116

KPIs and balance sheet

KPI	Q2 2024	Q3 2024	Q4 2024
Cash ($M)	$39.3	$30.9	$26.6
Revolver Borrowings ($M)	$7.0	$14.0 (US line)	$50.5
Total Liquidity ($M)	$192.2	$177.2	$111.0
Net Leverage (TTM, adj EBITDA, cont. ops)	—	2.5x (pro forma payment timing)	4.7x
FCF – Continuing Ops ($M)	$6.4 (Q2 FCF)	$17.1 (Q3)	$0.8 (Q4)

Notes: Q3 leverage cited at 2.5x reflected timing of proceeds; YE 2024 leverage 4.7x on lower EBITDA .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales ($M)	FY 2025	N/A	$670 – $710	New
Adjusted EBITDA ($M)	FY 2025	N/A	$25 – $30	New
Net Sales ($M, ex divested)	FY 2024	$730 – $780 (Aug)	$710 – $740 (Nov)	Lowered
Adjusted EBITDA ($M, ex divested)	FY 2024	$28 – $36 (Aug)	$20 – $25 (Nov)	Lowered

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2: Q2’24)	Previous Mentions (Q-1: Q3’24)	Current Period (Q4’24)	Trend
Portfolio/footprint actions	Announced Cab Structures sale; evaluating Industrial Automation; restructuring and headcount reduction >10% YTD	Closed Chillicothe consolidation; Cab Structures sale closed 10/1; IA sale closed 10/30; actions weighed on operations but pay down debt	Portfolio largely complete; ~85% inefficiencies remediated; focus on operating leverage from Morocco/Mexico	Stabilizing post actions
End-market outlook (Class 8)	2024 down; 2025 down; rebound in 2026 with emissions change	2024 down ~7%; 2025 further down ~10%; ~25% rebound in 2026	2025 H1 down ~14% YoY, H2 up ~6% YoY; 2026 +12% pre-2027 regs	Bottoming in 2025; prebuy tailwind late 2025–2026
ConAg softness	Noted deterioration; 2024 ConAg down 10–15%+	2024 ConAg ~15% down; 2025 flat early outlook from customers	2025 decline ~5–10%; ES new wins outside ConAg to offset	Still soft; partial offsets via mix
Electrical Systems ramp	Slower ramps pressured margins; leadership changes coming	New ES leader hired; aim to make ES growth engine	ES new wins ~15% of 2025 ES revenue; shift to low-cost sites	Gradual ramp; margin rebuild
Cost savings/efficiency	Restructuring to improve profitability	Ongoing SG&A and ops centralization; daily cadence to stabilize	$15–$20M 2025 cost savings; EBITDA margin expansion expected	Improving through 2025
Leverage/liquidity/covenants	Used sale proceeds to pay down debt; strong liquidity Q2	Cash proceeds in Q3; leverage cited ~2.5x pro forma	YE net leverage 4.7x; Dec amendment provides covenant “wiggle room”; refi discussions in 2025	Watch leverage path/H1’25 peak

Management Commentary

“2024 was a year of meaningful change for CVG…divestitures of non-strategic assets and businesses…we believe the improvement initiatives executed in 2024 will unlock significant operational efficiencies that we have already started to benefit from in 2025.” — James Ray, CEO .
“We expect to see EBITDA growth and margin expansion in 2025 which are reflected in our full year 2025 guidance ranges.” — Andy Cheung, CFO .
“We…believe we are now in a position to drive accretive growth, accelerate margin expansion, increase capital efficiency…While these actions created some operational inefficiencies in 2024, we believe we've remediated approximately 85% of those and expect to address the rest in early 2025.” — James Ray, CEO .
“Working capital improvements is a critical focus for CVG in 2025…we expect to return to positive free cash flow in 2025.” — Andy Cheung, CFO .

Q&A Highlights

New wins/ramp: 2024 wins were front-loaded (Q1–Q3); awards are seasonally slower in Q4; ~15% of 2025 Electrical Systems revenue tied to new wins; confident more programs launch/offset declines .
Market outlook: Year-to-date tracking in-line with aggregate declines; expect Class 8 prebuy to aid later in 2025; volatility requires tight customer coordination to manage labor/inbound supply .
Cost savings capture: $15–$20M targeted in 2025, mostly realized from Q2 onward; some savings offset by inflation/wages; still implies margin expansion YoY .
Facilities/footprint: Running legacy and new low-cost sites in tandem; positioned to grow into capacity, with optionality to adjust footprint depending on ConAg recovery .
Covenants/leverage: Debt amendment in December provided covenant flexibility “throughout 2025”; exploring 2027 maturity refinancing options during 2025 .
Aftermarket integration: Rolling Aftermarket back into product segments to improve engineering coordination, lead times, and SG&A efficiency; aftermarket growth focus maintained .
Margin path: Mgmt “maniacally” focused on gross margin; entitlement ~15% GM long-term; near-term margin expansion driven by operational efficiencies and leverage as volumes recover .

Estimates Context

Wall Street consensus (S&P Global) for Q4 2024 EPS/revenue was unavailable at query time due to API limit; therefore, comparisons versus consensus are not shown. Values from S&P Global could not be retrieved; comparisons to estimates are unavailable at this time.

Key Takeaways for Investors

2025 is an execution year: the bar is set for EBITDA growth and margin expansion on lower revenue; hitting the $25–$30M EBITDA guide amid ConAg/Class 8 softness is pivotal for sentiment .
Cost/ops proof points: watch Q2–Q4 cadence for gross margin expansion and capture of $15–$20M savings; any slippage on Mexico/Morocco ramps or program launches reopens downside .
Electrical Systems mix shift: new wins outside ConAg (~15% of ES revenue in 2025) are strategic to diversify and improve content; timely ramp is a key bull/bear debate .
Balance sheet/FCF: management targeting positive 2025 FCF and debt paydown; YE leverage at 4.7x elevates sensitivity to EBITDA delivery and working capital release; covenant flexibility secured, refi discussions underway .
Structural simplification is real; benefits must flow to P&L: with ~85% inefficiencies remediated and portfolio actions done, quarterly margin prints will drive the narrative from here .
Near-term trading implication: prints that show sequential margin/EBITDA inflection and inventory/work-cap progress likely re-rate the equity; conversely, continued ES ramp delays or ConAg deterioration risk guidance credibility .

Appendix: Additional Detail

Selected YoY comparisons (Q4 2024 vs Q4 2023)

Revenue: $163.3M vs $193.7M, (15.7)% .
Adjusted EBITDA: $0.9M vs $8.3M, (89.2)% .
GAAP EPS: $(1.04) vs $0.67, impacted by non-cash tax valuation allowance of $28.8M .

Liquidity and cash flow (point-in-time and period)

YE 2024 total liquidity $111.0M ($26.6M cash; $50.5M revolver borrowings; $84.4M availability) .
Q4 FCF (continuing) $0.8M; total company FCF $(8.6)M reflecting discontinued operations drag .

Outlook and end-market context

FY2025 guide: Net Sales $670–$710M; Adjusted EBITDA $25–$30M .
ACT Class 8 builds: 2025 316k; 2024 actual 332,382 units; 2026 growth expected ahead of 2027 emissions .
ConAg 2025 projected decline ~5–10%; ES new wins expected to soften impact .

Commercial Vehicle Group, Inc. (CVGI)·Q4 2024 Earnings Summary